The platform where shares are issued and traded has become a reliable means of investing, also known as the share market. Almost anyone can indulge in the world of the share market and function towards positive returns because of the advent of a mobile trading app. Here’s a guide on how to invest in the stock market for beginners.
- What is the share market?
A share market is a platform wherein companies issue shares and individuals trade them. Moreover, trading shares and mutual fund investment, derivatives, bonds, and other financial instruments are also allowed to trade in the stock market. So when an individual wants to trade only in the shares issued by companies, they invest in the share market. However, any investor who is willing to trade using other securities can also enter the stock market and perform the same.
Stock exchanges are a crucial element of the share market. The stock exchange allows trading companies, stocks, and other instruments. However, security or stock can only be traded when it features on the stock exchange list. The exchange platform catalogs all the securities to be traded and facilitated. In India, you get to trade on two primary exchanges: the Bombay Stock Exchange and the National Stock Exchange.
- How should you invest in the share market?
Investing in the primary share market – when an investor is willing to invest in both the primary and secondary share market, you must have a demat account. A demat account acts as a carrier of the electronic copies of the traded shares. Moreover, you also need a trading account along with the demat account, as it allows you to trade & invest shares in the market.
You get allotted a select number of shares depending on the market response when you invest in a company IPO. Once all the applications for investing in the IPO are received from the company, monitor the demand and the number of shares available. Depending on the available shares, the shares are allocated to the traders. Using a net banking process called application supported by blocked amounts, you can easily apply and invest in an IPO. In this process, if you are willing to offer to buy shares of Rs.2 lakhs, the amount is used towards the IPO. When the company allots shares, the exact Funds needed for the shares allocated to you get debited to the company. However, the balance gets credited to your account. Once allotted, the shares are noted down on the stock exchange, and a trader can start trading with them within a week in the share market.
Secondary share market investment – You require a demat and trading account for the secondary share markets, similar to investing in the primary share market. Both accounts must be connected to a bank account to allow seamless transactions. As the next step, you must log in to your trading account and select the shares you want to buy or sell. Ensure you have enough funds That are required for carrying out such transactions when you are purchasing shares. Also, please select the correct number of shares while selling them.
As the next step, you must choose the price for buying and selling the shares. The buyer or the seller then reciprocates your request. At last, you complete your transactions by transferring the shares or the money and receiving the requisite funds or shares and exchange.
You must understand the investment practices as the share market might be lucrative. Anyone can invest using an investment app in the shares they wish too. But one must gain maximum knowledge about the share market before making any kinds of investment.